Copyright 2013 Scripps Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Copyright 2013 Scripps Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

DAYTON, Ky. - A scathing state audit accuses the former superintendent of Dayton Independent Schools with taking nearly $224,000 in unauthorized benefits and payments.

State auditor Adam Edelen said a special investigation found that Gary Rye took unauthorized retirement contributions, travel expenses, sick time and leave over an eight-year period. Rye, who had been superintendent for 15 years, retired at the end of 2012.

Rye also intimidated staff members responsible for issuing checks if they questioned him, according to the audit report.

The FBI is investigating possible criminal charges against Rye and the small Dayton district is "aggressively pursuing every penny," said school board attorney Matt DeMarcus. That includes filing a theft claim with its insurance company and suing the independent auditor who annually reviews the district's books.

"The board pays money to an auditor to make sure any money isn't stolen and he let this money fly out beneath his nose," DeMarcus said.

Jay Brewer, who succeeded Rye as superintendent last July, said he immediately raised concerns after looking at the district's books with the district's financial officer. Brewer said the school board took those concerns to the state auditor, and that's how the state auditor's investigation began.

According to the audit, Rye's unauthorized pay and benefits included:

$146,276 for his personal retirement contributions and service credit purchases – benefits not included in his contract.

$47,429 for sick and annual leave days. Some of the leave was not approved by the board; some leave was taken but not deducted from his leave balance.

$21,464 in fuel purchases for his personal vehicle charged to a district credit card.

Also, according to the audit, Rye double- and triple-dipped on his travel expenses by using district credit cards to pay for gas and expenses, submitting mileage and other costs for reimbursement and receiving additional reimbursements from the Kentucky Association of School Administrators when he served on the board of directors. In total, he received roughly $8,052 for expenses he did not incur, that were duplicated or were submitted for meetings that apparently did not occur.

"Ripping off the district and the KASA is heinous enough, but he really outdid himself when he restricted athletic teams from traveling long distances for games in order to save money," Edelen said.

Rye had nothing to say to the auditor's staff during the investigation, auditor's spokesperson Stephanie Steitzer said. "They spoke to Mr. Rye's attorney multiple times and Mr. Rye, through his attorney, declined to be interviewed," she said.

The auditor's office said it referred the report to the FBI, Kentucky Teachers' Retirement System, Kentucky Department of Revenue and Kentucky State Committee for School District Audits.

Dayton schools struggled financially in the past few years as funding decreased and expenses decreased. The district also struggled academically, culminating in a 2011 assessment by the Kentucky Department of Education that led to state management of the district's middle school and high school.

Brewer, who grew up in Ludlow, said he came to the superintendent's job after 12 years as a teacher and principal in Ludlow and eight years as principal at Ruth Moyer Elementary in Fort Thomas.

He said the loss of funds makes his job harder. "But the reality is all schools are in a financial bind," he said.

"I'm looking at cutting $300,000 from the budget, which means instructional aids and staff. The reality is the state has cut our budget and the federal government has sequestered our funds. Every dollar is important. After this, some people might ask, ‘Why didn't you take better care of the money you had?'